Hawaii Hospitals Partner with State's Largest Payor on Value-Based Program

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Hawaii hospitals are partnering with the Hawaii Medical Service Association, the state's largest payer, in the nation's first statewide value-based initiative to raise quality of care and reduce costs.



"This new partnership has considerable promise to improve care," says Kevin A. Roberts, president and CEO of Castle Medical Center, a participant in the program. "It gives us tools and resources needed to compare ourselves against national benchmarks and work collaboratively."


Normally insurers develop their own quality measures for hospitals to meet, but measures for the new program, called Advanced Hospital Care, were "designed by hospitals, for hospitals," Mr. Roberts says. He says the program will also help Hawaii hospitals achieve value-based purchasing mandates planned by CMS.


The four-year program will cover all 1.3 million residents of Hawaii receiving hospital care. It sets targets and helps hospitals measure and reach performance improvements. The hospitals can earn incentives by meeting the goals of the program, which include reducing mortality, readmissions and the cost of care, as well as improving patient satisfaction, safety and adherence to clinical evidence.


In the first year of the program, HMSA will tie 5-7 percent of hospital payments directly to the achievement of quality standards. After three years, about 15 percent of HMSA payments will be based on performance, quality and patient safety goals.


"We think that by teaming up with hospitals we can ensure better care and slow the unsustainable growth in healthcare costs," says HMSA Senior Vice President Hilton Raethel. "Collaboration between insurers and providers has never been more crucial as we try to improve the quality and cost of care that is delivered."


Mr. Raethel says that by aligning incentives, providers and payors can work toward "mutually beneficial goals" that enhance patient safety while reducing the overuse of procedures, readmissions, unnecessary ED visits and hospital-acquired conditions.


The program will use performance improvement metrics developed by Premier healthcare alliance. "We have a disciplined, measured and organized methodology for building and sustaining change," says Premier President and CEO Susan DeVore. She notes that the template for Advanced Hospital Care has "already been proven on the national scale, producing dramatic quality improvements that benefit patients."


Ms. DeVore says the Hawaii program is the first of its kind in the nation. While Maryland has a statewide value-based purchasing program, that program does not partner with a private payor and it is not as broad at the Hawaii initiative.


Learn more about the Hawaii Medical Service Association.


Related Articles on Value-Based Purchasing:

CMS Issues Final Rule for Value-Based Purchasing Program

Not Ready to Form an ACO? Three Value-Based Alternative Models

6 Ways ACOs Differ From HMOs


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